Some might say that the foreclosure crisis has had a beneficial effect on the housing market; namely, a drop in mortgage delinquencies. While this might seem harsh, many are pointing to a “hard lesson learned” that serves as a deterrent for others struggling with their mortgage debts. But before we attribute the drop in delinquencies as the result of thousands of Americans losing their homes to foreclosure, let’s consider other explanations.
The Bigger Picture
Although watching others suffer through the foreclosure process and recent trend in mortgage fraud schemes has taught many of us a valuable lesson about dealing with our own debts, but it isn’t the sole reason why many of us have become more vigilant about our mortgage debts.
First, let’s consider the lending practices that have been so heavily scrutinized in recent months. Up until a few months ago, lenders were playing top dog as they sat with all the power in approving or denying mortgage modifications for homeowners in distress. Recent efforts by government agencies have increased the pressure on big banks to start playing ball and loosening their modification practices. Between government programs aimed at helping homeowners avoid foreclosure and big banks finally starting to participate in helping homeowners, many who would have faced foreclosure have now successfully found a way around their mortgage debts.
It is also important to note that most homeowners have become more educated about mortgages, their mortgage modification options and ways to avoid foreclosure. Equipped with new knowledge about the process, more homeowners are able to fight off foreclosures before it is too late. Further, the recent push by government programs designed to help homeowners has helped many learn key tricks of the trade when attempting to secure a mortgage relief plan.